Introduction
The business environment has become too complex mainly due to the increased globalization and therefore has to be understood thoroughly for the continuous operation of the business. This outline report explains the business environment of automobile industry in the People’s Republic of China in terms of political, legal, economic, and cultural and ethical traditions.

Political 1. Encourage the Automobile Industry Development Policies
Having struck by the world-wide financial crisis, the global automobile market currently is facing severe situations. In order to revive the automobile market, the State Department decides to reduce the vehicle purchase tax. This policy will play a major role in raising automobile consumption market while effectively encourage automobile purchase, expanding domestic demands as well as facilitating the steady and rapid development of domestic automobile industry. 2. China’s Road Construction Policy
In order to maintain the automobile market to develop, the government enhances plans to provide priority to the construction of express highways and accelerating the construction of the National Express Highway. The ministry is also promoting the integration of unconnected roads.

Legal 1. Legal provision relating to environmental population by automobiles and safety measures.
2. Intentions on harmonizing the regulatory standards with the rest of the world.

Economic 1. Rapid Development of Economy
The economy of the People’s Republic of China(PRC) is the second largest in the world, after the United States. China is the world’s fastest-growing major economy, with consistent growth rates of around 10 percent over the past 30 years. China is also the largest exporter and second largest importer of goods in the world. The country’s per capita Gross Domestic Product(GDP) was $7,544 (International Monetary Fund, 94th in the world) in 2010. As China’s economic importance has grown, so has attention to the structure and health of that economy. 2. Purchasing Power
According to experts, when average per capita GDP hits about $1000, a country will start to see households purchasing cars. When the average per capita GDP is about $3000, most of families will purchase cars. In 2010, China’s per capita GDP was $7,544; therefore there will be strong purchasing power of automobiles for the Chinese individuals.

Socio-Cultural and Ethical Traditions
A great deal of traditional Chinese culture has been accepted as part of the Chinese society by the Government, proclaiming it as an essential achievement of the civilization and making it as a Chinese national identity. However, there are many different values and cultures among the Chinese individuals depending on their provinces. In some cultures, they encourage individuals to improve reputation in all sorts of methods. Therefore, pushing them into purchasing more vehicles and even the luxury cars.
With a population of over 1.3billion, the PRC is concerned about its growth population and has implemented a strict family planning policy in order to maintain one child per family. Even so, the consumption of automobiles in the country has been increasing for the past several years.

Recommendation
Due to PRC being the second largest economy in the world as well as the strong purchasing power of the citizens and well-established government policy, a foreign company is recommended to enter the market. It will be advantageous for them to develop and expand their business.

List of References

Hong, Y and Mu, Y 2010, China’s Automobile Industry : An Update, East Asian Institute, National University of Singapore.

Maurin, E J 2011, The Hong Kong Times, Pest Analysis, viewed on 18th August 2012, <http://sites.cdnis.edu.hk/students/100106/2011/03/31/pest-analysis/>

National Bureau of Statistics of China 2006, Saloon Car Production Kept Increasing in Year 2005, National Bureau of Statistics of China, China, viewed on 18th August 2012, <http://www.stats.gov.cn>

National Bureau of Statistics of China 2006, Fast and Stable Economic Growth in the First Half of 2006, National Bureau of Statistics of China, China, viewed on 18th August 2012, <http://www.stats.gov.cn>

Ni, J 2009, ‘China Auto and Manufacturing R&D’, viewed on 18th August 2012, Automotive Conference, University of Michigan China, pp2-48.

Xiaomei, L 2009, Study on Global Logistics Integrative System and Key Technologies of Chinese Automobile Industry, Tianjin University, Wuhan.